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17 Pages

### capm

Course: FIN 367, Spring 2008
School: University of Texas
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Word Count: 537

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7 Chapter Capital Asset Pricing Theory (CAPM) Capital Asset Pricing Model (CAPM) Equilibrium model that underlies all modern financial theory Derived using principles of diversification with simplified assumptions Markowitz, Sharpe, Lintner and Mossin are researchers credited with its development Resulting Equilibrium Conditions All investors will hold the same portfolio for risky assets market portfolio...

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University of Texas - FIN - 367
Brief Introduction Options MarketsOption Terminology Buy - Long Sell - Short Call: the right to buy Put: the right to sell Key Elements Exercise or Strike Price Premium or Price Maturity or Expiration.Market and Exercise Price Relationsh
University of Texas - FIN - 367
Suggested Solutions to Chap 10 Exercises Fin 367 Spring 2008 Professor Bing HanChapter 10:1.The percentage bond price change is: Durationy 1 y7.1940.0050 1.100.0327 or a 3.27% decline2.Computation of duration: a. YTM = 6% (1) (2) Ti
University of Texas - FIN - 367
Suggested Solutions to Chap 9 Exercises Fin 367 Spring 2008 Professor Bing HanChapter 9: 4. The bond price will be lower. As time passes, the bond price, which is now above par value, will approach par. If the yield curve is upward sloping, you cann
University of Texas - FIN - 367
Suggested Solutions to Chap 8 Exercises Fin 367 Spring 2008 Professor Bing HanChapter 8: 4. c. This is a classic filter rule, which would appear to contradict the weak form of the efficient market hypothesis. The P/E ratio is public information so t
University of Texas - FIN - 367
Chapter 8 Selected Problems: From textbooks1, P269 #4 2, P270 #7 3, P270 #9 4, P271 #17Additional multiple choice questions:1. The weak form EMH states that _ must be reflected in the stock price. A) all market trading data B) all publicly avail
University of Texas - FIN - 367
Chapter 7 Selected Problems: From textbooks1, P234 #1 2, P234 #7 3, P235 #10 4, P236 #19Additional multiple choice questions: 1. According to the capital asset pricing model, a well-diversified portfolio's rate of return is a function of _. A) mar
University of Texas - FIN - 367
Suggested Solutions to Selected Problems for Chap 6 Fin 367 Spring 2008 Professor Bing HanChapter 6:3. a. The mean return should be equal to the value computed in the spreadsheet. The fund's return is 3% lower in a recession, but 3% higher in a boo
University of Texas - FIN - 367
Suggested Solutions to Selected Problems Chap 5 Fin 367 Spring 2008 Professor Bing HanChapter 5:4.E(r) = [0.3244%] + [0.414%] + [0.3(16%)] = 14% (16 14)2] = 540= [0.3(44 14)2] +[0 .4(14 14)2] + [0.3= 23.24% The mean is unchange
University of Texas - FIN - 367
Chapter 5 Selected Problems: From textbooks1, P154 #4 2, P154 #5 3, P157 #19Additional multiple choice questions:1. The holding period return on a stock is equal to _. A) the capital gain yield over the period plus the inflation rate B) the capi
University of Texas - FIN - 367
Finance 367 Spring 2008 Exam 3 (Practice)Your Name_, Last_ FirstYour Student ID number _Notes: 1, The total is 25 points. 2, Problems 1 through 16 are multiple choices. Each correct answer gives you 1 point. 2, For Short Essay and Calculati
University of Texas - FIN - 367
Finance 367 Spring 2008 Exam 2 (Practice) SolutionMultiple Choices:1. Historical records regarding returns on stocks, Treasury bonds, and Treasury bills between 1926 and 1998 show that _A_. A) stocks offered investors greater rates of return than
University of Texas - FIN - 367
Finance 367 Spring 2008 Exam 2 (Practice)Multiple Choices:1. Historical records regarding returns on stocks, Treasury bonds, and Treasury bills between 1926 and 1998 show that _. A) stocks offered investors greater rates of return than bonds and b
University of Texas - FIN - 367
Answers are on the next page 1. An American put option gives its holder the right to _. A) buy the underlying asset at the exercise price on or before the expiration date B) buy the underlying asset at the exercise price only at the expiration date C
University of Texas - FIN - 367
Chapter 3 and Chapter 4 Problems: From textbooks 1, P92 #7 2, P93 #12 3, P123 #8 4, P123 #10Additional multiple choice questions:1._ is called the Big Board. A) The American Stock Exchange B) The New York Stock Exchange C) The Pacific Stock Excha
University of Texas - FIN - 367
Finance 367 Professor Bing Han Spring 2008 Data Analysis #1The data you need to do this problem set is contained in an Excel file named DataPS1.xls which contains the series of historical holding period returns in the text in Table 5.3 (for your co
University of Texas - FIN - 367
Finance 367 Spring 2008 Exam 1 (practice)Multiple Choices:1. Which of the following is not a money market instrument? _ A) treasury bill B) commercial paper C) preferred stock D) banker's acceptance2._ is not a characteristic of a money market
University of Texas - FIN - 367
Suggested Solutions to Exercises #1 Chap 1-2 Fin 367 Spring 2008 Professor Bing HanSolution to #1 on P23 a. Cash is a financial asset because it is the liability of the federalgovernment. b. No. The cash does not directly add to the productive ca
University of Texas - FIN - 367
35.0030.0025.0020.0015.00Series210.005.000.00 -60.00 -40.00 -20.00 -5.00 0.00 20.00 40.00 60.00-10.00200.00150.00100.0050.000.00 -60.00 -40.00 -20.00 0.00 20.00 40.00 60.00-50.00-100.00Finance 367 Spring 2008: Answer
University of Texas - FIN - 367
Margin trading and short selling ExamplesStock Margin Trading Maximum margin is currently 50%; you can borrow up to 50% of the stock value Set by the Fed Maintenance margin: minimum amount equity in trading can be before additional funds must be
University of Texas - FIN - 367
Chapter 10 Selected Problems: From textbooks1, P346 #1 2, P346 #2 3, P346 #7 4, P347 #11Additional multiple choice questions:1. All other things equal, which of the following has the longest duration? A) a 30 year bond with a 10% coupon B) a 20 y
University of Texas - FIN - 367
Suggested Solutions to Selected Chap 7 problems Fin 367 Spring 2008 Professor Bing HanChapter 7: 1. 7. a, c and d. a. The beta is the sensitivity of the stock's return to the market return. Call A the aggressive stock and D the defensive stock. Then
University of Texas - FIN - 367
Chapter 6 Selected Problems: From textbooks1, P191 #3 2, P193 #6 3, P193 #7 4, P193 #9Additional multiple choice questions:1. Risk that can be eliminated through diversification is called _ risk. A) unique B) firm-specific C) diversifiable D) all
University of Texas - FIN - 367
Finance 367 Spring 2008 Practice Exam 1 (Solution)Multiple Choices:1. Which of the following is not a money market instrument? _C_ A) treasury bill B) commercial paper C) preferred stock D) banker's acceptance2._D_ is not a characteristic of a
University of Texas - FIN - 367
Finance 367 Spring 2008 Exam 3 (Practice)Your Name_, Last_ FirstYour Student ID number _Notes: 1, The total is 25 points. 2, Problems 1 through 16 are multiple choices. Each correct answer gives you 1 point. 2, For Short Essay and Calculati
University of Texas - FIN - 367
Suggested Solutions to Selected Problems Chap 3-4 Fin 367 Spring 2008 Professor Bing HanSolution to Chap3 problems 7. a. You buy 200 shares of Telecom for \$10,000 (you invest \$5000, and borrow another \$5000). These shares increase in value by 10%, o
University of Texas - FIN - 367
Chapter 1 and Chapter 2 Problems: From textbooks 1, P23 #1 2, P23 #4 3, P55 #1 4, P55 #6Additional multiple choice questions:1. Asset allocation refers to the _. A) allocation of the investment portfolio across broad asset classes B) analysis of
University of Texas - FIN - 374C
Chapter 11 Corporate Value and Value-Based ManagementANSWERS TO BEGINNING-OF-CHAPTER QUESTIONS11-1Operating assets include cash required for liquidity purposes, inventories, receivables, and fixed assets necessary to operate a business, while no
University of Texas - FIN - 374C
Chapter 25 Bankruptcy, Reorganization, and LiquidationANSWERS TO BEGINNING-OF-CHAPTER QUESTIONS25-1 Bankruptcies occur in firms of all sizes. Small firms, with fewer creditors, are often able to work out informal settlements and thus avoid the time
University of Texas - FIN - 374C
Chapter 16 Capital Structure Decisions: Part IIANSWERS TO BEGINNING-OF-CHAPTER QUESTIONS16-1Arbitrage is generally thought of as the process of buying an item in one market and simultaneously selling it at a higher price in another market and th
University of Texas - FIN - 374C
CHAPTER 13Capital Budgeting: Estimating Cash Flows and Analyzing Risk1Estimating cash flows:Relevant cash flows Working capital treatment InflationRisk Analysis: Sensitivity Analysis, Scenario Analysis, and Simulation Analysis2Pro
University of Texas - FIN - 374C
CHAPTER 17Distributions to Shareholders: Dividends and Repurchases1Topics in Chapter Theories of investor preferences Signaling effects Residual model Stock repurchases Stock dividends and stock splits Dividend reinvestment plans2What
University of Texas - FIN - 374C
CHAPTER 18Initial Public Offerings, Investment Banking, and Financial Restructuring1Topics in Chapter Initial Public Offerings Investment Banking and Regulation The Maturity Structure of Debt Refunding Operations The Risk Structure of Deb
University of Texas - FIN - 374C
FIN 374C / Spring 2008 / Prof. Liz GoldreyerFINANCIAL PLANNING AND POLICY FOR LARGE CORPORATIONS (FIN 374C)SYLLABUS, SPRING 2008 Information about the course will be posted throughout the semester on Blackboard. Instructor Dr. Liz Goldreyer Office
University of Texas - FIN - 374C
CHAPTER 10Determining the Cost of Capital1Topics in ChapterCost of Capital ComponentsDebt Preferred Common EquityWACC2What types of long-term capital do firms use? Long-term debt Preferred stock Common equity3Capital Com
University of Texas - FIN - 374C
M&amp;A Tax Implications Example Given: \$50M Purchase Price \$30M BV of target's assets 40M appraised value of target's assets 35% Corp. tax rate Target has no debt What is implications to: 1) target shareholders 2) post-merger asset values 3) taxes to po
University of Texas - CH - 304k
physical or chemical change? boiling water 1. p digesting food 2. c soda goes &quot;flat&quot; 3. p shooting a rubber band 4. p grilling a hamburger 5. c adding sugar to your tea 6. both adding lemon to your tea 7. c mowing the grass 8. p the smell of perfume
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Animal and Human StudiesBio 001OutlineReview: Scientific Method BioethicsAnimal vs. Human ResearchHumans in ResearchReview: BioethicsBioethics: the interface of biology and ethics, involving philosophy Bioethics is multidisciplinary Anim
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6) Perception a) Perceptual Thresholds i) Threshold refers to a point above which a stimulus is perceived and below which it is not perceived. Determines when one is conscious of a stimulus. (1) Gustav Fechner psychologist who originally defined th
Cornell - MATH - 1920
cosu v | u | v |projv uu v v | v |2Vector equation of a linetv Given: normal: nr (t )r0AiBj CkVolume of ParallelogramP0( x0 , y 0 , z 0 )u vTriple Scalar Product (Volume of Parallelepiped)u v | u | v | cos u v | u | v |
Cornell - PSYCH - 2140
Psych 214 Exam Study GuideMemory 6.1 Memory: a bestiary a. Integration of all memories over lifetime much of self 6.2 Memory is for interaction with the world a. &quot;The basic claim is that an individuals memory serves perception and action.&quot; Glenbe
Cornell - PSYCH - 1101
Perception Perceptual Thresholds Threshold refers to a point above which a stimulus is perceived and below which it is not perceived. Determines when one is conscious of a stimulus. Gustav Fechner psychologist who originally defined threshold as th
Cornell - ECON - 1110
Question of the Week #2 The trite saying &quot;put your money where your mouth is&quot; suggests a nearly trivial implication to the most simple of markets. Given that the individual &quot;you&quot; refers to is a participant of a two man economy (with two goods that ca
Cornell - MATH - 1920
Mayur Pandya 4/23/2006 Multivariable Calculus Chapter 12 Review 12.1: Double Integrals over Rectangles 1) Single Integration:nblimn i 1f (x ) x =a* if ( x)dx2) Definition of a double integral:m m,n n * * f ( xij , y ij ) A = i 1 j 1
Cornell - MATH - 1920
Name_Answer Key_ Date_ Chapter 12 Quiz 1) Find the double integral of f(x,y) = 6x2 + 2y over R where R is the region between y = x2 and y = 4.2) Find the volume to the part of the paraboloid z = 9 - x2 - y2 that lies inside the cylinder x2 + y2 = 4
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ADVERTISING FINAL REVIEW:CHAPTER 3:affirmative disclosure American Advertising Federation (AAF) American Association of Advertising Agencies (AAAA) Association of National Advertisers (ANA) Advertisers must make known their product's limitations or
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Organizational Behavior- study of factors that affect how individuals and groups act in organizations Levels of Analysis- Individual, groups and teams, Organizational processes Management Functions- The Four Pillars Plan-Where do you want to be in th
Baylor - MGT - 3305
Herzberg's Duality Theory- Motivators and Dissatisfiers Motivators- Advancement, the work itself, growth Dissatisfiers- rules, salary, status, security Maslow's Hierarchy- p. 13 diagram Mclelland- 3 needs. Achievement, Power, and Affiliation Needs ar
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Power- someone causing another person to do something Political Decision Making- active disagreement over goals and how to pursue goals Types of Power (4)Formal Informal Expert, Referent, Charismatic- intense form of Referent power Legitimate, Reward
SUNY Plattsburgh - FIN - 422
Lee Saffer, Steven Bennet, Aditya Dash Finance 124-10 Corporations are NOT Good Corporate Citizens- Topic PaperA debate on corporate citizenship should start with a definition of what it is to be a good corporate citizen. Our definition which is ad
SUNY Plattsburgh - FIN - 422
Corporations Are Not Good Citizens By: Brittany Albert, Morgan Cardet, and Anna Oleksiak According to the World Economic Forum, corporate citizenship &quot;is about the contribution a company makes to society through its core business activities, its soci
SUNY Plattsburgh - FIN - 350
Chapter 1Overview of a Financial PlanChapter Objectives Explain how you benefit from personal financial planning Identify the key components of a financial plan Outline the steps involved in developing your financial planCopyright 2007 Pears
SUNY Plattsburgh - FIN - 350
Chapter 2 Planning with Personal Financial StatementsChapter Objectives Explain how to create your personal cash flow statement Identify the factors that affect your cash flows Show how to create a budget based on your forecasted cash flows Des
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2/11/08 HW for Weeks 1,2,&amp; 3 Ch. 1 Intro to Construction Safety 1) Complying with OSHA standards will not eliminate all injuries at a job site. Construction is a dangerous industry; there will always be some hazards such as falls, electrocutions, ca
Wentworth - CCEV - 625
2/25/08 Week 4 &amp; 5 HW Ch. 10 Accident Investigation/Reconstruction 2) Accident reduction will benefit a company. There are both financial and personnel reasons for this. The cost of accidents is enormous. In 1982, it was reported that occupational a
Wentworth - CCEV - 625
3/3/08 CCEV-625-03 Week 6 HW Ch. 15 Fall Protection 2) The process of evaluating a fall hazard is to go through a detailed assessment. A team of competent persons is required to frequently assess the work areas to document potential fall hazards. Te
Wentworth - CCEV - 625
4/7/08 Construction Safety &amp; Risk Mgmt CCEV-625-03 Ch. 25 Confined Spaces 1. In confined space entry, the primary hazards are chemicals hazards, stored energy hazards, physical hazards, and entrapment or restraint of movement. An example of a chemic
Wentworth - CCEV - 625
Intro to OSHA Congress made in 1970 General Duty Clause 5(a)(1) Subpart H Rigging Equipment Wire rope: can't be used if any length of 8 dia. Exceeds 10% of total # of wires. Calculating load on sling legs: Divide load by number of sling legs = Y Len
Binghamton - WTSN - 104
Date: 3/4/08 To: Professor Fellows, WTSN 104 and Team AquaForce From: Logan Spring Subject: Analytical Review #1IntroductionWhat is the problem statement? How can fresh water systems in Kenya be sanitized? How does this article relate to team Aqua
Binghamton - WTSN - 104
Date: 4/7/08 To: Professor Fellows, WTSN 104 and Team AquaForce From: Logan Spring Subject: Analytical Review #2IntroductionAquaForce's Problem Statement: How can fresh water in Kenya be sanitized for drinking? How does this article relate to Team
Binghamton - WTSN - 104
Title PageBackground of Kenya Costal Country Eastern, Sub Saharan Africa Home to about 34 Million 60% of the population lives in poverty. Most workers are Farmers Limited good paying jobs Many rural areas rely on Slow Sand Filtershttp:/www
Binghamton - WTSN - 104
The Fight Against Illegal DrugsPrepared for:The Bureau of International Narcotics and Law Enforcement AffairsPrepared by:Team NBI - Marc Ghiron, Yonah Schwartz, Robert StarkDate:May 11, 20071EXECUTIVE SUMMARY We established twenty glo